Investors have given $12.2 million to fund an insurance broker offering a cloud-based risk and insurance management system for small and mid-sized businesses. The broker, Embroker, promises to empower commercial lines customers by giving them tools to buy, compare, analyze, manage and store all of their insurance policies and data in one place.
The Series A funding of $12.2 million was led by Canaan Partners with participation from Nyca Partners and XL Innovate, as well as a new debt facility from Silicon Valley Bank. This is the second venture capital round for Embroker. Prior investors Bee Partners, FinTech Collective, Vertical Venture Partners and 500 Startups also participated in the round. That earlier July 2015 round raised $2.2 million.
Embroker uses its own software, data and predictive analytics to help businesses buy all types of commercial insurance. The system is for use by small business owners, risk managers and chief financial officers and allows users to upload their firms’ policies so they can analyze their coverage and benchmark it with their peers. Embroker then uses its data and predictive analytics to recommend coverage and optimize pricing.
Embroker says it has partnered with 10 commercial lines carriers for placing business, including The Hartford and Travelers, and is licensed in all 50 states. The broker has 24 employees.
Among the features it promises: Real-time access and online reporting of losses with advice on how to minimize them; the ability to track and manage vendor certificates online as well as customize requirements by project or vendor and receive notifications for non-compliance or expired policies; and a system to track assets, vehicles and drivers, add property location information and other variables.
Hub, Applied Systems Ties
San Francisco-based Embroker was founded in 2015 by CEO Matt Miller, a principal at the private equity firm Hellman & Friedman. Hellman & Friedman has interest in numerous insurance-related firms. It owns Hub International and Applied Systems and it has investments in Arch Capital Group. It previously owned Vertafore, which it sold in 2010. Miller formerly served on the boards of Hub and Applied Systems. Prior to joining Hellman & Friedman in 2013, Miller worked at Bain Capital in Boston and Hong Kong and at Bain & Co. in New York.
“This industry has needed more transparency since its inception — now it’s possible to use technology to achieve that end,” said Miller in a statement. “Getting the right insurance coverage at the right price is key to the health and success of every business but, until now, all but the largest corporations have relied on traditional insurance brokers and outdated, manual processes to make those critical business decisions. By bringing clarity and simplicity to what’s traditionally been an opaque and painful process, we’re enabling business owners to embrace insurance and risk management as tools for growth rather than obstacles.”
Embroker calculates that small and medium-sized businesses typically have four to six separate insurance policies and spend up to a million dollars a year in premiums. Because the industry relies mainly on manual processes and sells complex products, few small-to-medium businesses review their insurance every year. Embroker aims to improve upon this with its platform that removes the hurdle to optimize coverage and automate the processes.
Embroker also announced the addition of Tom DeMichael as vice president of customer experience. DeMichael brings 23 years of experience in commercial insurance operations management, most recently with Willis Towers Watson. Prior to Willis, he was with The Horton Group as the director of property/casualty operations.
Commercial Lines Platforms
Embroker is among a crop of commercial lines instech startups drawing interest from investors. In March, Next Insurance, an online shopper for small businesses, announced a $13 million seed investment led by investors Zeev Ventures, TLV Partners and Ribbit Capital. Next Insurance plans to launch its first product in the spring. Also in March, New York-based CoverWallet received $2 million for what it calls its online insurance manager from Two Sigma Ventures, Highland Capital Partners, Founder Collective and other angel investors. This concierge-like service offers small businesses automatic risk analysis, document management, benchmarking and data analytics, intelligent data driven risk and insurance assessments, coverage recommendations, peer risk comparisons and claims support.
The small commercial lines market is both growing and increasingly competitive. A report from McKinsey & Co. said the competition in this market will intensify as more small business customers exhibit their openness to buying via direct and digital channels and as more large insurance carriers enter the field.
Insurers are also investing in digital platforms including the small commercial lines platform CoverHound, 24 percent of which is now owned by the new Chubb. Insureon, an online agency for small business insurance, raised more than $30 million last October. Seattle-based AssureStart, which sells to business with fewer than 30 employees, is backed by the American Family Mutual Insurance Co. Insurer Hiscox has been expanding its online platform for small businesses for a number of years.
Last December, Berkshire Hathaway Inc., which owns GEICO, created Berkshire Hathaway Direct Insurance Co. to sell insurance directly to businesses over the Internet. The new insurer planned to initially focus on workers’ compensation and business owners’ package policies.
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- Small Commercial Buyers Moving Online: Who Are They? What Do They Want?
- How Carriers, Agents Can Adapt As Small Commercial Buyers Move Online
- ACE Takes 24% Stake in CoverHound’s Online Commercial Insurance Plans
- 2 Instech Startups Target Small Business Insurance Market
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